The U.S. Treasury Department has reportedly begun an investigation into an investment made by Silicon Valley venture firm Benchmark in Manus AI, a prominent Chinese AI startup. Manus recently secured $75 million at a valuation of about $500 million, making headlines as one of the most promising AI companies globally, with Benchmark leading the financing round.
Concerns fueling the Treasury’s scrutiny involve the 2023 restrictions imposed by the U.S. government on American investments into certain Chinese technology companies. Although Benchmark’s legal team previously reviewed and approved this investment, the critical factor was that Manus AI does not build its own standalone artificial intelligence models. Instead, it operates as a “wrapper,” leveraging existing AI frameworks developed elsewhere.
Another significant consideration in Benchmark’s decision was Manus AI’s legal makeup: the startup is incorporated in the Cayman Islands, a common and often employed jurisdiction by Chinese corporations such as Alibaba to facilitate foreign investment without directly tying to mainland China.
Despite these legal justifications, the investment has drawn sharp criticism from peers within the venture capital industry. Delian Asparouhov of Founders Fund publicly reacted with satire on social media, hinting at potential repercussions from the investment by posting, “wow, actions have consequences?”
Benchmark, Manus AI, and representatives from the U.S. Treasury have thus far declined to provide any additional comment regarding the investigation or the nature of the ongoing review.
